5 Times Square joins billion dollar sales club.

Capitalizing on record real estate prices in much the same way that its rival Equity Office Properties did this week with the $19 billion disposition of its massive commercial portfolio to The Blackstone Group, Boston Properties announced the $1.28 billion sale of 5 Times Square to AVR Properties.

Part of the recent trend of busy disposition activity within the REIT industry, the sale is also part of a growing club of building trades in which properties have fetched values greater than a billion dollars--an unheard of sum for a single asset only a few years ago.

Since the General Motors building first careened past the billion-dollar mark with its $1.4 billion sale in 2003, a handful of trophy buildings have yielded similarly high values and two have even set new records. Last year, 200 Park Avenue was sold to Tishman Speyer for $1.72 billion in what was the most expensive single asset ever sold and earlier this year 1211 Avenue of the Americas was sold to Beacon Capital for $1.5 billion.

But unlike recent years when real estate continued to appreciate wildly while office market measures like vacancy and rents floundered, many investment sales experts indicate that the current strength of the Manhattan office market provides clear justification for investors who shell out record sums. Market data indicates that midtown is on the cusp of record rents and that more leases are getting signed at premium rents than ever before.

Last week, Scott Latham, a member of Cushman & Wakefield's Manhattan capital markets team, drew gasps during a REBNY luncheon at the Hilton Grand Ballroom when he said that rents could jump by as much as 50% in the next few months. Premium space in trophy buildings, which already can command values as high as $150-$175 per s/f, may be poised for the steepest rate rises because it is a segment of the market among the highest in demand.

5 Times Square, according to The Post, has a number of office tenants paying rents far below market value for large blocks of space in the building.